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It's called an export subsidy |
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Written by Stumo
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Wednesday, 22 October 2008 |
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Hey all you free traders. What do you call it when a country pays companies to export? An export subsidy.
China just increased export subsidies for its textile and garment products. They call them tax rebates.
China is raising tax rebates for certain exports to help producers cope with smaller profit margins as a result of slacking market demand, the yuan's appreciation and rising production costs.
I thought they were low cost providers that we cannot compete with here. These are double digit rebates. Big stuff.
For example, the export tax rebate for some toys, textiles and garments will be raised to 14 percent. There will be a nine percent rebate for certain plastic products, 11 percent for daily necessities and porcelain artifacts, 11 and 13 percent for some furniture.
I'm sure the wacko free traders will complain about this export subsidy. (Crickets chirping).
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In the news
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Here is another piece written by Dr. McMillion of MBG Information Services.
Even during year of recession, the US is producing almost $2 billion each day LESS than it is spending and is forced to borrow and sell assets abroad to make up the difference
The Dept. of Commerce’ BEA reported today on the most complete accounting of US commercial relations with the world – the Current Account -- for 2008-Q3. Despite the US recession that started one year ago, today’s report shows that during the 91 days of Q3 the US suffered another -$174.1 billion in global losses bringing total Current Account losses for the first three calendar quarters of 2008 to -$530,675 billion.
http://www.bea.gov/newsreleases/international/transactions/transnewsrelease.htm
That is, despite the US recession that began in December 2007, through the first 274 days of 2008 the US produced goods and services worth -$1.94 billion LESS each day than it spent and was forced to borrow and sell assets abroad to offset the difference. Economists expect that when a country’s economy is growing slower than the world economy – and certainly when it is in recession – that country’s current accounts will be in surplus as it imports less and exports more.
Since 2001 the US has grown slower than the world economy every year and yet the US has accumulated current account deficits (production shortages/net foreign borrowing) totaling -$4.8 Trillion.
Any economic rescue plan that ignores this constant hemorrhage of production and wealth is doomed to tragic failure. |
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